OTTAWA, Jan 25 (Reuters) - Canada's annual inflation rate in
December remained at a three-year low of 0.8 percent,
emphasizing how little pressure there is on the Bank of Canada
to raise interest rates, Statistics Canada data indicated on
Friday.

The rate is the lowest since 0.1 percent recorded in October
2009 and is far below the Bank of Canada's 2.0 percent target.
Market analysts had expected the annual rate to increase to 1.2
percent from November's 0.8 percent.

"I think it just reinforces the view that the Bank is locked
on the sidelines for a lengthy spell here," said Doug Porter,
deputy chief economist at BMO Capital Markets.

Consumer prices in December fell by 0.6 percent from
November, which Porter attributed to seasonal discounting and
lower prices for gasoline.

The Bank of Canada on Wednesday cited soft inflation as one
of the reasons why a rate hike would be less imminent than it
has previously anticipated. A Reuters poll conducted later the
same day showed most of Canada's primary dealers expect the next
rate hike in the first quarter of 2014.
Continued...